By Elizabeth Koh

SEOUL-- Samsung Electronics Co. reported its largest profit in more than 18 months, fueled by a bounceback in smartphone sales and demand for memory chips.

The South Korean giant, like many other technology companies, has largely sidestepped a financial fallout as pandemic-induced shifts to working and studying from home have boosted demand for Samsung's core products.

As the world's largest smartphone and memory chip maker, Samsung's results often mirror the broader tides of the industry.

For the quarter ended Sept. 30, Samsung's net profit rose to 9.36 trillion South Korean won, equivalent to $8.24 billion, a 49% rise from the prior year's 6.29 trillion won. Revenue grew by 8% to 66.96 trillion won from 62 trillion won during the same period a year ago.

Analysts had forecast about 9 trillion won in net profit and 64.8 trillion won in revenue, according to estimates gathered by S&P Global Market Intelligence.

The Suwon, South Korea-based firm is the latest tech company to show benefits during the Covid-19 era. This week, Microsoft Corp. said sales rose 12% this quarter on demand for its cloud-computing services, while Sony Corp. raised its full-year operating profit forecast by nearly $800 million after posting better-than-expected results in the third quarter.

On a Thursday earnings call, Samsung said sales for its key products, though especially smartphones, are expected to remain strong because of pent-up demand and the rollout of 5G. But other products like televisions could face more competition during the holiday season.

"There's still a possibility that with the increase of Covid-19 cases in key markets, such as the U.S. and Europe, some of these countries may go back into lockdown," said Kim Won-hee, the vice president of the company's visual display business. "This may lead to economic contraction globally on a long-term basis."

But Samsung faces fresh concerns about its future after the Sunday death of its long-ailing chairman Lee Kun-hee. His son, Lee Jae-yong, 52, who has led the company by default since his father was incapacitated by a heart attack in 2014, is expected to retain control atop the company.

Mr. Lee, grandson of Samsung's founder, will need to discover new growth engines for the tech giant. But those existing businesses have been strong of late.

Operating profit for the company's semiconductors business rose to 5.54 trillion won, 81% over last year's 3.05 trillion won third-quarter haul. Its operating profits in its mobile division rose 52% to 4.45 trillion won from 2.92 trillion won a year prior.

Much of the third-quarter momentum in the company's mobile business was helped by pent-up demand from the downturn earlier in the year and reopening economies, analysts said.

Huawei Technologies Co. last quarter unseated Samsung as the world's largest smartphone maker, with the Chinese firm surging based mostly on domestic sales. But Samsung is expected to reclaim the top spot with 22% of the global smartphone market versus Huawei's 15%, according to third-quarter estimates from Counterpoint Research, a market researcher. Huawei's phone sales have been hindered by U.S. restrictions that limit the Chinese firm's access to essential parts--including those made by Samsung.

Through the first half of the year, Samsung suffered a larger drop in smartphone shipments than the industry, despite having offered a full range of 5G devices. Its priciest flagship phones, including the Galaxy Note 20 launched in August, have underperformed analyst expectations, said Tom Kang, a research director for Counterpoint. More sales of its midtier phones, some of which have been equipped with 5G capability and sell for as low as $325, helped make up for that slump. Pricier foldable models have also failed to catch on beyond a core set of power users.

Samsung's sales have benefited twofold from the U.S.'s ongoing campaign against Huawei. Samsung's semiconductor division reported 18.8 trillion won in revenue, over the prior year's 17.59 trillion won, despite cooling demand from data centers. It was aided by a surge in orders from Huawei before new restrictions on sales to them went into effect in September.

Samsung, on the earnings call, said it is still waiting to hear back from U.S. officials about an application to export components to Huawei, but suggested that demand for its chips from other Chinese phone makers would hold steady.

Operating profits also tripled in Samsung's consumer-electronics division, to 1.56 trillion won, as home appliances demand rose briskly among consumers still spending time at home. Samsung shipped 15 million television units in the third quarter compared with 10 million for the same quarter a year prior, said S.K. Kim, a Seoul-based analyst with Daiwa Securities.

Write to Elizabeth Koh at Elizabeth.Koh@wsj.com

(END) Dow Jones Newswires

10-29-20 0026ET